A company’s draft financial statements for 2021 showed a profit of $630,000. However, the trial balance did not agree, a
Posted: Sun May 29, 2022 8:44 pm
A company’s draft financial statements for 2021 showed a profit
of $630,000. However, the trial balance did not agree, and a
suspense account appeared in the company’s financial
statements.
Subsequent checking revealed the following errors:
1 The cost of an item of plant $48,000 had been entered in the
cash book and in the plant account as $4,800.
2 Bank charges of $440 appeared in the bank statement in
December 2021 but had not been entered in the company’s
records.
3 One of the directors paid $800 due to a supplier in the
company’s payables ledger by a personal cheque. The bookkeeper
recorded a debit in the supplier’s ledger account but did not
complete the double entry for the transaction.
4 The payments side of the cash book had been understated by
$10,000.
Which of the above items would require an entry to the
suspense account in correcting them?
What would the company’s profit become after the
correction of the above errors?
of $630,000. However, the trial balance did not agree, and a
suspense account appeared in the company’s financial
statements.
Subsequent checking revealed the following errors:
1 The cost of an item of plant $48,000 had been entered in the
cash book and in the plant account as $4,800.
2 Bank charges of $440 appeared in the bank statement in
December 2021 but had not been entered in the company’s
records.
3 One of the directors paid $800 due to a supplier in the
company’s payables ledger by a personal cheque. The bookkeeper
recorded a debit in the supplier’s ledger account but did not
complete the double entry for the transaction.
4 The payments side of the cash book had been understated by
$10,000.
Which of the above items would require an entry to the
suspense account in correcting them?
What would the company’s profit become after the
correction of the above errors?